Correlation Between Alfas Solar and KOC METALURJI

Can any of the company-specific risk be diversified away by investing in both Alfas Solar and KOC METALURJI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alfas Solar and KOC METALURJI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfas Solar Enerji and KOC METALURJI, you can compare the effects of market volatilities on Alfas Solar and KOC METALURJI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alfas Solar with a short position of KOC METALURJI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfas Solar and KOC METALURJI.

Diversification Opportunities for Alfas Solar and KOC METALURJI

0.39

Correlation Coefficient

Alfas Solar  KOC METALURJI

Weak diversification

The 3 months correlation between Alfas and KOC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alfas Solar Enerji and KOC METALURJI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOC METALURJI and Alfas Solar is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alfas Solar Enerji are associated (or correlated) with KOC METALURJI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOC METALURJI has no effect on the direction of Alfas Solar i.e., Alfas Solar and KOC METALURJI go up and down completely randomly.

Pair Corralation between Alfas Solar and KOC METALURJI

Assuming the 90 days trading horizon Alfas Solar Enerji is expected to generate 0.94 times more return on investment than KOC METALURJI. However, Alfas Solar Enerji is 1.06 times less risky than KOC METALURJI. It trades about 0.28 of its potential returns per unit of risk. KOC METALURJI is currently generating about 0.01 per unit of risk. If you would invest  5,190  in Alfas Solar Enerji on October 23, 2024 and sell it today you would earn a total of  2,705  from holding Alfas Solar Enerji or generate 52.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alfas Solar Enerji  vs.  KOC METALURJI

Alfas Solar Enerji

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Alfas Solar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KOC METALURJI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOC METALURJI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, KOC METALURJI is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alfas Solar and KOC METALURJI

The main advantage of trading using opposite Alfas Solar and KOC METALURJI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfas Solar position performs unexpectedly, KOC METALURJI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KOC METALURJI will offset losses from the drop in KOC METALURJI's long position.

The idea behind Alfas Solar Enerji and KOC METALURJI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.